Grounded Citicorp Joins Big Three
By Michelle Krebs January 28, 2009
Welcome to the club - the corporate jetless club, Citicorp executives. You are in good company.
Despite taking $50 billion in federal funds to stay afloat, Citicorp only canceled delivery of a fancy $50-million corporate jet when the American public found out -- and a U.S. Senator gave bank officials a public tongue lashing.
U.S. Sen. Carl Levin, D-Mich., who advocated federal help to Detroit automakers, has been cheesed about Congress' double standard for the banks and the automakers.
Levin joins many in being ticked that the banks and Wall Street have received hundreds of billions of dollars from the federal government's Troubled Asset Relief Program (TARP) with virtually no oversight or scrutiny. And there have been well publicized indiscretions, including paying executive bonuses, holding meetings at pricey spas and now taking delivery -- almost -- on a state-of-the-art corporate jet.
Meantime, execs of the Big Three were raked over the coals in Congressional hearings on virtually ever aspect of their business and, albeit rightly so, scolded loudly for each flying their individual corporate jets to Washington to beg for money.
Further, General Motors and Chrysler, which have been granted a combined $17.4 billion in federal loans, must meet certain milestones Feb. 17 and March 31 to keep the money. No such milestones exist for the banks. Nor is there a requirement for banks and Wall Street firms to ground corporate jets whereas GM, Ford and Chrysler promised to divest themselves of any aircraft as a condition of getting government help.
On Monday, Citicorp explained it had ordered the plane four years ago, and it would cost millions in penalties if delivery were canceled. By Tuesday, after the news hit the airwaves and drew harsh comment from Levin, the bank put out a short statement saying simply: "We have no intent to take delivery of any new aircraft."
Take heart, Citicorp executives. You are in good company with Ford's Alan Mulally, General Motors' Rick Wagoner and Chrysler's Robert Nardelli. They're really nice guys; you'll enjoy sitting next to them on your commercial flights.
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